Buying by pvt traders dragged wheat procurement: Food min

Written by Sandip Das | New Delhi | Updated: May 18 2013, 06:05am hrs
Govts refusal to sell to traders below MSP forced them to enter market, says study

The food ministry on Friday attributed the sharp fall in wheat procurement in the ongoing rabi marketing season (2013-14) to purchases by private bulk buyers, such as floor millers in Uttar Pradesh, Madhya Pradesh and Rajasthan.

We are happy that farmers are getting more than the minimum support price (MSP) offered by private traders in many states, which had led to a decline in wheat purchases by government agencies,"food minister KV Thomas told FE.

Wheat procurement from farmers by Food Corporation of India (FCI) and state government-owned agencies this year could fall below 30 million tonne (mt) from the previous year's record 38 mt, a sharp decline of 21%. Farmers are bringing in produce slowly this year compared to the last year, an FCI official said.

Thomas said the government would take a call on the decline in wheat procurement next month after the drive is formally over. We have enough stocks to meet the requirements under the national food security legislation, he said.

An assessement carried out by the food ministry said that the government's refusal to sell excess wheat to private traders below MSP under the Open Market Sale Scheme (OMSS) has forced private traders to enter the market.

The government has tried to give signals to bulk buyers of wheat through a careful pricing strategy under OMSS that they should not depend on government supplies at throwaway prices for their needs and they should enter the mandis for buying wheat for their requirements during the harvesting season, when prices are near MSP, the assessment noted.

This has paid dividends and with lower production, near-MSP prices and other aspects, the procurement of wheat in the country has come down, the note stated.

For exhausting excess wheat held with various state procurement agencies and the FCI, the food ministry had fixed OMSS prices at R1,484 per quintal, a hike of R199 over the MSP offered to Punjab farmers. For other key producing states, against flour millers advocating cheaper foodgrains under OMSS, the government had added transportation cost to the price fixed at R1,484 per quintal

Out of a total allocation of close to 9.5 mt under OMSS to bulk buyers during 2012-13, more than 6.4 mt have been purchased by private traders, which is about 68% of the total allocation.

Despite lower wheat procurement this season, the government is not unduly worried about running PDS as FCI has last year's stocks of close to 23 million tonne.

Apart from the central agency FCI, wheat is also being purchased from farmers by state governments, cooperatives and other bodies.

The government buys wheat from farmers at the MSP to the meet demands of various welfare schemes, such as its mid-day meal programme.